“The FTSE 100 remains short of direction heading towards the long Easter weekend with the main movers on the index driven higher by M&A activity,” says AJ Bell Investment Director Russ Mould.
“Distribution specialist Diploma found itself in demand as it announced the acquisition of a US speciality fastener distributor and underlined it expected returns for the group as a whole to remain strong in 2024.”
Ithaca Energy
“Ithaca Energy may talk about reducing investment in the UK North Sea thanks to the Energy Profits Levy, but its actions and words are somewhat at odds given the announcement of a proposed share-based deal with Italy’s Eni to acquire the latter’s UK oil and gas fields.
“This deal makes Ithaca the second largest operator in the region and leaves Eni with a near-40% stake in the group. That said, disquiet in the industry at the way companies have been treated by the Treasury is real, with the lack of consistency, as much as the absolute rate of tax, a bone of contention in the sector.”
S4 Capital
“Advertising agency S4 Capital continues to struggle in a difficult market as it misses targets again.
“For a while Martin Sorrell’s reputation and a focus on digital marketing was able to sustain a big advance in the share price, but any early optimism is now colliding with hard reality, and S4’s market valuation is just a fraction of its 2021 highs.”
Boohoo / ASOS
“It’s been a tough time for online fast fashion over the last couple of years and Boohoo’s reputation has been buffeted by ethical issues around its supply chain and ASOS by poor inventory management and weak cash flow, so investors will be taking any small win they can.
“And they got that win with news a CMA probe into greenwashing conducted by both companies (and Asda’s George range of clothing) has not found they breached consumer protection law.
“Look beyond the headline and it’s clear the CMA has not let them off scot-free. Some of the measures agreed with the competition authority could result in extra costs, which could be hard to absorb for companies operating at razor-thin margins, and they will have to back up any nods to sustainability in labelling and marketing.
“This could harm their ability to appeal to an increasingly eco-conscious young adult demographic which makes up their core market.
“These companies enjoyed their time in the sun during the pandemic but they still face huge challenges to remain relevant and profitable in a post-Covid world.”
Gamestop
“No sooner has the meme stock craze been resurrected by Donald Trump’s media company enjoying a big share price boost, it’s somewhat ironic that the grandfather of meme has fallen flat on its face.
“GameStop’s shares fell 15% in pre-market trading after missing earnings estimates. The lack of detailed commentary about trading and the decision not to hold a conference call effectively means management is hiding under a rock, hoping everything will eventually be better. You couldn’t get a bigger red flag.”
DS Smith
“Countless stocks have traded on relatively low valuations for years as the UK market has been unloved by foreign investors. There have been plenty of chances for companies to take advantage of this valuation opportunity by launching takeover bids, but increasingly we’re seeing interested parties only throw their hat in the ring when someone else makes the first move.
“DS Smith is the latest in a growing line of companies to find itself at the centre of a bidding war. Having already been courted by Mondi, it has now received an expression of interest from International Paper. The latter proposal is structured as an all-share offer which means UK investors will have to be comfortable owning US-listed stock to support the deal.
“Ultimately, the board will choose the offer that delivers the best value for shareholders. But what it shows is that investors should not rush to accept the first bid that comes along if one of their stocks becomes a takeover target. They just might find someone else wants to make a higher bid, so load up on the popcorn and enjoy the action.”
Travis Perkins
“With the share price at a four-year low, it was inevitable that something had to change with Travis Perkins. Chief executive Nick Roberts is leaving the company once a successor has been found, with the statement worded in such a way to imply he was given the boot.
“Travis Perkins was among the pandemic winners, with people stuck at home during lockdown inspired to improve their dwellings which led to a surge in business for tradesmen. This trend soon eased off in tandem with a patchy performance in the housing market, leaving builders’ merchants and DIY retailers scrambling to refocus and find a way to get back on top.
“Several years later, one would have thought management would have created a new plan and started executing on it. However, in the case of Travis Perkins, its results would suggest not.
“For all the talk in its full-year results earlier this month of ‘transforming the operating model to build a stronger business’, it’s clear that more work needs to be done which means a fresh pair of hands behind the wheel.”
These articles are for information purposes only and are not a personal recommendation or advice.
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